March sales rise at Costco, Victoria’s Secret parent L Brands

SEATTLE, Wash., Thu Apr 11, 2013 — Costco Wholesale Corp. reported a slightly smaller-than-expected jump in same-store sales in March on Thursday, hurt by weak international results and lower gas prices, while Victoria’s Secret parent L Brands Inc. reported better-than-expected sales at all of its chains.

Costco fared better in the United States, where sales at stores open at least a year rose 5 percent, largely in line with expectations. Small appliances, jewelry and fresh food showed some of the biggest gains.

L Brands saw continued improvement at its La Senza chain as well as an unexpected rise in same-store sales at Bath & Body Works. Companywide, same-store sales rose 3 percent, while Wall Street expected them to be flat, according to Thomson Reuters.

Analysts expect 13 top U.S. retailers, including T.J. Maxx parent TJX Cos. Inc. and Gap Inc., to post a 1.8 percent rise in same-store sales for March, according to Thomson Reuters, down from a rise of 2.9 percent in March 2012. They will report later Thursday.

There have been concerns a tightening job market could hurt consumer spending. The U.S. labor market recovery showed signs of losing momentum in March as employers hired at the weakest pace in nine months.

Costco profit jumps despite light membership fee growth

ISSAQUAH, Wash., Wed Dec 12, 2012 — Costco Wholesale Corp.’s quarterly earnings beat Wall Street estimates, but the largest U.S. warehouse club chain collected less in membership fees than some analysts anticipated.

Shares of Costco were up 0.8 percent at $99.11 in morning Nasdaq trading after a slight decline earlier in the session.

Members pay up to $110 per year to shop at Costco’s cavernous stores and website, where they can buy everything from carrots to kayaks. The fee revenue pads Costco’s bottom line and allows it to offer low prices and take in thin profit margins on items it sells.

Membership fee revenue rose 14.3 percent to $511 million in the first quarter ended on November 25, Costco said. The Issaquah, Washington-based chain raised fees for most U.S. and Canadian members by 10 percent on Nov. 1, 2011.

The fee increase seems to have had little to no impact on renewal rates, Chief Financial Officer Richard Galanti said during a conference call.

Still, the increase in membership fee revenue was not as great as some had anticipated, and growth declined from a rise of about 18 percent in the preceding quarter.

BMO Capital Markets analyst Karen Short said she had expected membership fee revenue of $534 million, while Sanford Bernstein analyst Colin McGranahan said the $511 million in fees was $4 million shy of his forecast.

Costco said it had earned $416 million, or 95 cents per share, in the quarter, up 30 percent from $320 million, or 73 cents per share, a year earlier.

Analysts on average were expecting a profit of 93 cents per share, according to Thomson Reuters I/B/E/S.

“While results were solid and clean in absolute terms, we believe this was largely line with expectations and unlikely to meaningfully move the stock,” said McGranahan, who rates Costco at “underperform.”

Lower-than-expected interest expenses and taxes helped boost earnings per share, said Short, who has an “outperform” rating on the shares.

Sales excluding membership fees rose 9.5 percent to $23.2 billion, just below the figure Costco gave last month, when it said quarterly sales rose 10 percent to $23.21 billion.

Apparel sales stay strong in April, but Costco misses estimates

NEW YORK, Thu May 3, 2012 – Several clothing retailers, including Limited Brands Inc. and Zumiez Inc., posted better-than-expected sales in April, helping to allay fears that March’s strength came from an earlier Easter and a warm start to the spring season.

But Costco Wholesale Corp. missed Wall Street estimates for the second month in a row, indicating competition with other big-box retailers hurt the biggest U.S. warehouse club operator’s performance.

Of the eight retailers that had reported April sales by early Thursday, four beat expectations and two missed, according to Thomson Reuters Data.

The Thomson Reuters index of analysts’ expectations for 20 retailers that report monthly sales at stores open at least a year called for a 1.5 percent increase in April, compared with a 4.3 percent rise in March.

March results benefited because of an earlier Easter – April 8 this year, compared with April 24 in 2011. It was also the warmest March in more than 50 years, which helped spur sales of spring clothing.

But that momentum continued into April.

Victoria’s Secret parent Limited Brands Inc. posted a 6 percent rise in same-store sales, beating estimates.

Teen clothing retailer Zumiez Inc. also beat estimates with a 10.1 percent rise.

And on Wednesday, American Eagle Outfitters Inc. sharply raised its profit estimate for the latest quarter as it sold more spring clothes at full price.

Costco was a different story. Its same-store sales rose 4 percent, while analysts were expecting a 5.1 percent increase, according to Thomson Reuters Data.

Costco Wholesale second quarter beats forecasts on strong sales

ISSAQUAH, Wash. – U.S. warehouse club operator Costco Wholesale Corp. posted quarterly profit above expectations, helped by strong sales.

For its second quarter, Costco earned $394 million, or 90 cents per share, up from $348 million, or 79 cents per share last year.

Sales rose 10 percent to $22.51 billion.

Total revenue for the company, which sells products from chicken to couches to customers who pay annual membership fees, was $23 billion, up 10 percent.

The company was forecast to earn 87 cents per share, on revenue of $22.83 billion, according to Thomson Reuters I/B/E/S.

Costco, Limited have impressive sales for January

NEW YORK – A handful of U.S. retailers, including Costco Wholesale Corp. and Limited Brands Inc., beat Wall Street’s expectations for January sales, but analysts are not so optimistic about department store chains and apparel chains that have yet to report on Thursday.

In fact, Abercrombie & Fitch Co. said sales for the fourth quarter ended in January were below its expectations and that it had to cut prices to clear out merchandise. It forecast earnings for the quarter below analysts’ expectations, and its shares fell 13.5 percent in premarket trading.

Discounts at many apparel chains climbed to as much as 70 percent in January from the 40 percent level in late December as the retailers tried to clear their shelves off winter goods, Nomura analyst Paul Lejuez noted earlier this week.

In particular, the Abercrombie & Fitch and Old Navy chains struggled to clear their shelves of outerwear, Lejuez noted.

The third-warmest January in 50 years was particularly cruel to department stores and apparel retailers, especially the ones that did not roll out spring items early to catch warmer-weather and fashion-driven traffic.

As to the early January winners, Costco’s better-than-expected 8 percent rise in same-store sales was helped by strong sales of food, small appliances and men’s apparel. The warehouse club’s comparable gasoline sales rose 15 percent, as members came to its pumps more often as prices rose.

Driving Limited’s performance was Victoria’s Secret, a brand that has resonated well with shoppers regardless of the vagaries of the economy or weather. Limited’s same-store sales rose 9 percent in January, while analysts expected only a 2.7 percent rise.

Costco raises membership fees; fourth quarter profit misses forecast

ISSAQUAH, Wash. ― Costco Wholesale Corp. is increasing annual membership fees by 10 percent for 22 million members, a long-awaited move that pleased analysts even as fourth-quarter profit missed forecasts.

The largest U.S. warehouse club operator sells products from paper towels to televisions at a discount to its members, who pay annual membership fees.

Before Wednesday’s announcement of fee increases, which take effect Nov. 1 for most U.S. and Canadian members, Costco had not raised its main fees since 2006.

“I think Costco was very reluctant to take a membership fee increase, which is essentially inflation of the membership fee, when their core customer was already dealing with a lot of inflation,” said Sanford Bernstein analyst Colin McGranahan.

Now that some higher costs, such as cotton, food and gasoline, have subsided, it may have seemed like more of an appropriate time for the increase, he said.

At the same time, Costco waited until this year to raise its regular $50 membership fee to $55, as the new higher rate is not taxable for residents of California. Previously, the tax-free limit had been $50.

For the fourth quarter that ended on August 28, net income was $478 million, or $1.08 a share, up from $432 million, or 97 cents a share, a year earlier.

Analysts on average had expected $1.10 a share, according to Thomson Reuters I/B/E/S.

Shares of the Issaquah, Washington-based company fell 2.1 percent to $79.90 in early trading on Nasdaq.

The earnings miss was due in part to an inventory charge stemming from inflation. As Costco’s product costs rose for items such as food and clothing, it took an inventory charge of $32 million, or 4 cents per share, in the quarter.

The company took a total of 12 cents per share in such charges during fiscal 2011, after no such charges in 2010.

September sales at stores open at least a year, or same-store sales, rose 12 percent including fuel. Analysts, on average, had expected a 10.1 percent rise, according to Thomson Reuters.

Costco’s September sales are “another data point that suggests despite all of the negative macro headlines, there’s not a lot of empirical evidence from the retailers yet that the U.S. consumer is slowing,” said McGranahan, who has a “market perform” rating on the shares.

Not all retailers are faring as well. September sales at top U.S. drugstore Walgreen Co.  rose less than expected.  Several other U.S. chains will report September sales later on Wednesday and on Thursday.

Costco’s membership fee increase follows a similar move by competitor BJ’s Wholesale Club Inc., which just went private. BJ’s raised its membership fee by $5 to $50 in January.

Costco’s U.S. and Canadian household and business memberships will cost $55 a year, up from $50 for most of those memberships.

Executive members, who receive rewards such as an annual rebate check to use in the store based on what they spend, will now pay $110, up from $100.

The fee increases affect a little more than 22 million members, roughly half of whom are executive members. Costco has roughly 35 million members overall.

While the increased fees could add 20 cents to 25 cents to earnings per share over the next two years as memberships are renewed, Janney analyst David Strasser expects roughly half of the fee increase will be used to hold down prices.

Membership fee revenue rose 10.7 percent to $590 million in the fourth quarter.

Costco previously reported that fourth-quarter sales rose 17 percent to $27.6 billion. Excluding inflation in gas prices and stronger foreign currencies, same-store sales rose 7 percent in the quarter.